$765 Million Tax Increase Package Advances

Oregon businesses and individuals will be saddled with $765 million in new taxes over the next two years under a package of bills approved this week by the House Revenue Committee and forwarded to the Joint Ways and Means Committee. HB 2649 raises personal income taxes by $504 million; HB 3405 increases corporate and business taxes by $261 million.
Under the amendments to HB 2649 adopted by the House Revenue Committee, the top personal income tax rate would be raised from 9 to 10.8 percent for households with incomes of between $250,000 and $500,000 (between $125,000 and $250,000 for single filers). For Oregonians with joint incomes of over $500,000 ($250,000 for single returns), the marginal rate would increase to 11.0 percent. Additionally, the deduction allowed on Oregon tax returns for federal income taxes paid would be phased down for joint incomes between $250,000 and $290,000 ($125,000 and $145,000 for single returns). There would no longer be a deduction for federal income taxes paid on joint tax returns showing income over $290,000 ($145,000 for single returns).

HB 3405, as amended by committee, increases the current 6.6 percent corporate income tax rate to 7.9 percent of corporate net income in excess of $250,000 for the 2009 and 2010 tax years. The tax rate is reduced to 7.6 percent of income over $250,000 for the 2011 and 2012 tax years. For the 2013 tax year and beyond, the corporate tax rate will be 7.6 percent on net income over $10 million.

HB 3405 also contains a new corporate minimum structure based on gross Oregon receipts as follows:
Oregon Sales…………………Tax
Less than $500,000……….$150
$500,000 to $1 million……$500
$1 million to $2 million….$1,000
$2 million to $3 million….$1,500
$3 million to $5 million….$2,000
$5 million to $7 million….$4,000
$7 million to $10 million…$7,500
$10 million to $25 million..$15,000
$25 million to $50 million..$30,000
$50 million to $75 million..$50,000
$75 million to $100 million.$75,000
More than $100 million……$100,000

Additionally, the bill creates a new minimum tax for s-corporations at $150; imposes a new annual “entity tax” of $150 on partnerships, LLPs and LLCs; and increases Secretary of State Corporation Division annual filing fees from $50 to $100 for domestic corporations and to $275 for foreign corporations.

AOI continues to work with its other business organization partners to defeat these tax increase measures. We are arguing that the new corporate minimum and permanent corporate income tax rate hike will result in a 33-PERCENT INCREASE in corporate taxes over just the next two years, lead to further job losses and stifle Oregon’s economic recovery…(continue article here)